The sugar industry was the product of a grand political bargain, more than anything that made economic sense. The British left Mauritius because the sugar plantation economy was a drain on its finances and, after independence, the European Union signed an agreement with sugar producing countries like Mauritius to buy their sugar at above market rates. The EU thought that this would render some economic stability to these countries and prevent them from being seduced by the Soviet Union. In Mauritius, the industry could continue as before and the Mauritian government could continue to bank on the support of small cane planters (this was the main constituency of the Labour Party). If the Europeans were willing to pay more for our sugar, who cared? The trouble is that soon everybody in Mauritius started falling asleep at the wheel and thought that the good times would continue forever. 

So, when the EU sugar agreement started being phased out in the 2000s and sugar prices plunged, it suddenly came as a rude to discover just how uneconomical the whole industry was. It cost more to produce sugar than what could be made selling it. How successive governments responded to this has been lamentable. The EU gave billions to help restructure the economy away from sugar. What successive governments did was instead lend the money to the sugar industry itself. The industry rebranded itself as a cane industry, let go of most of its workforce that went down from 15,000 to just 5,000, and started speculating in real estate with large luxury villas to sell to rich foreigners. The state threw inpermanent residencies to sweeten the deal. 

The big sugar firms and richer planters dabbled in real estate while the poorer planters simply abandoned their land. Nine thousand hectares of cane plantations have been abandoned at last count. This approach had two main consequences, the price of real estate ballooned (a bubble that’s due to burst at any time) making housing less affordable for everyone else and the land abandonment problem meant that projects like using bagasse to produce electricity was never a serious alternative. Nor indeed could it even keep the industry humming properly. Mahen Seeruttun says they need 400,000 tonnes a year to keep them working properly. Last year, only 350,000 tonnes were produced.

The government tried to cut taxes on sugar exports but that could not really solve the fundamental issue: no amount of government support could make a sclerotic industry thrive. More recently, the state cut the CESS tax and introduced foreign exchange support to exporters, including sugar. So now we are in the position of actually subsidising an industry that does not contribute much to the economy, does not bring in much foreign exchange, does not employ many and at the same time (unbelievably) continues to hog most of the arable land in the country. In 2016, 51,477 hectares were under cane in contrast to just 7,858 hectares used to grow a more crucial commodity…food. A country that does not grow at least some of its own food cannot survive. And food may not lead to much by the way of export earnings but it’s something that will always be crucial and can be relied upon to reduce the trade deficit. Which is more than can be said for sugar at this point. 

The king is dead. Don’t put it on life support that everybody else has to pay for.

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